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November 12, 1999


The opinion of the court was delivered by: Schwartz, District Judge.


Plaintiff Housing Works, Inc. ("plaintiff" or "Housing Works") filed this action seeking injunctive and declaratory relief. Plaintiff asserts claims under 42 U.S.C. § 1983, alleging that it has been deprived of its rights to freedom of speech and equal protection guaranteed by the First and Fourteenth Amendments to the U.S. Constitution. Plaintiff also asserts claims pursuant to Article I, §§ 8, 9, 11 of the New York State Constitution and challenges New York State administrative law. This matter is now before the Court on plaintiffs motion for a preliminary injunction directing defendants (i) to reinstate plaintiff's original rankings in defendants' ranking of the 1999 applications for U.S. Department of Housing and Urban Development ("HUD") funding, and (ii) to transmit the reinstated ranking to HUD before the close of the application deadline for next fiscal year. Defendants cross-move the Court to abstain from proceeding with this action. For the reasons set forth below, plaintiffs motion is GRANTED and defendants' cross-motion is DENIED.


The facts below are undisputed except where otherwise indicated.

A. History of tension between Housing Works and the Giuliani

Housing Works is a not-for-profit corporation that operates two supportive housing programs in New York City. Defendants are the City of New York ("City"), the City's Department of Homeless Services ("DHS"), DHS Commissioner Martin Oesterreich ("Oesterreich"), former DHS Associate Commissioner for Policy and Planning Susan Wiviott ("Wiviott"), and DHS employee Sheila Sawyer ("Sawyer") who is one of the Jane Does, (Sawyer Aff. ¶ 3), (collectively: "defendants").

Housing Works, begun in 1991, provides housing and other services for homeless "persons with AIDS and HIV" ("PWAs"). (Decl. of Charles King, dated Oct. 6, 1999 ("King Decl."), ¶¶ 2, 23.) Plaintiff's clients are not only PWAs but individuals who are also mentally ill, emotionally disturbed, financially needy, or chemically dependent, including individuals with such problems who were rejected by other providers. (King Decl. ¶ 3.) Housing Works has a history of criticizing what it perceives as the indifference to PWAs of the administration of Mayor Rudolph Giuliani. It concedes that it has disrupted a Town Meeting, engaged in civil disobedience in the entrance of the mayor's office, taken over the Division of AIDS Services offices, disrupted HIV Planning Council meetings and engaged in other similar conduct, some of which is referred to below. (King Decl. ¶ 59 n. 10.)

In 1994, Housing Works vigorously opposed plans to abolish the City's Division of Aids Services ("DAS") (now known as: Division of Aids Services and Income Support or "DASIS"). (King Decl. ¶ 19.) Housing Works particularly criticized then Deputy Mayor Fran Reiter ("Reiter"), in a series of demonstrations. (King Decl. ¶ 20.) Housing Works' representatives, accompanied by a TV crew, entered a meeting that plaintiff alleged had been convened for the purpose of abolishing DAS, and began to read on camera from a document that plaintiff refers to as Reiter's "secret" agenda. As quoted in the New York Times of December 15, 1994, Reiter responded by decrying Housing Works' "non-negotiable demands and grandstanding" that had engendered "unproductive, time wasting meetings". (King Decl. ¶ 21; Id. at Ex. B.) The Administration ultimately did not abolish DAS. (King Decl. ¶ 22.)

Housing Works organized the "This City Is Ours" rush-hour demonstration against the mayor on April 25, 1995, blocking four bridges and tunnels. (King Decl. ¶ 59 n. 10.) Later, Housing Works commenced an action challenging the benefits provided to PWAs by the City, Henrietta D. v. Giuliani, No. 95 Civ. 0641(SJ), 1996 WL 633382, 21 A.D.D. 329 (E.D.N.Y. Oct. 25, 1996) (seeking to force Human Resources Administration to provide better benefits). (See King Decl. ¶ 15.).

In March of 1997, Charles King ("King"), co-executive director of Housing Works, attended a meeting between the City's Human Resources Administration ("HRA") and Housing Works concerning new contracts and contract renewals. (King Decl. ¶¶ 1, 32.) Housing Works alleges that HRA's then-Commissioner Lillian Barrios-Paoli ("Barrios-Paoli") (i) threatened Housing Works with retaliatory treatment if it continued to "cause trouble" by advocating on behalf of PWAs, (ii) asked Housing Works why it was so hostile to the Giuliani Administration, and (iii) advised that Housing Works could not expect favorable treatment with Housing Works' attitude. (King Decl. ¶ 33.). Pamela S. Brier ("Brier"), Chair of the Board of Directors of Housing Works, also attended the March 1997 meeting and corroborates King's version. (Affidavit of Pamela S. Brier, dated April 2, 1998, attached to King Decl. as Ex. I ("Brier Aff."), ¶¶ 1-4.)

In September 1997, approximately one month prior to HRA's press release referred to above, Lou-Ellen Barkan ("Barkan"), then Chief of Staff for Deputy Mayor Randy Mastro ("Mastro"), discussed Housing Works with a City employee (whose name she cannot recall). (King Decl. ¶ 40.) The first entry in Barkan's two pages of notes on that discussion is: "Housing Works (Fran Hates them)", referring to Fran Reiter, and below that: "Act-up" and "AIDS advocacy". (King Decl. ¶ 40 (emphasis in original); Ex. J att. to King Decl.) Defendants note that City officials who were considering the contracts with Housing Works have denied that Reiter played any role in the Administrations' decisions as to the contracts. (Bailey Aff. in Opp. to Applications for Preliminary Injunctions ¶ 179, submitted to state court. ("Bailey State Aff."))

The hand-written notes of Beth Kaswan ("Kaswan"), the City's Chief Procurement Officer and of the head of the Mayor's Office of Contracts ("MOC"), and of MOC staffer Jeffrey Weinstein ("Weinstein"), certain of which were prepared prior to October 22, 1997, the date of the press release, refer to the City's concern that Housing Works might embark on another demonstration or protest. (King Decl. ¶ 41; Ex. K.L att to King Decl.) Weinstein wrote, on October 7, 1997, "Doing nothing will force HWks to do something — going public". (King Decl. ¶ 42 n. 6; Ex. L. at 3, att to King Decl.) Both Kasman and Weinstein referred in their notes dated October 20, 1997 to a strong rumor that Housing Works would protest at City Hall, with Kasman adding that Mastro "needs a report on all they (HW) did wrong" and that Mastro had told Barrios-Paoli that she "must be prepared to respond on camera tomorrow". (King Decl. ¶ 43, 44; Ex. K at 11; Ex L at 5.) Kasman's notes dated October 21, 1997 bracket news of an imminent protest together with a reference to a meeting with David Klasfeld ("Klasfeld"), then on Mastro's staff. (King Decl. ¶ 45; Ex. K at 13.) Kasman's hand written notes also refer to Housing Works' demonstrations or marches that she had heard of from Richard Bonamarte, HRA's Chief Contracting Officer, from Gerard Hoey, HRA's Inspector General at the Department of Investigation, and from Barkan. (King Decl. ¶ 41 n. 5.)

On October 29, 1997, in a meeting with Barkan following the demonstration, Kasman wrote "Housing Works broke into campaign headquarters & chained themselves to desks". (King Decl. ¶ 47; Ex. K at 13.) Weinstein, attending the MOC meeting over which Kasman presided, wrote "This a.m. chained themselves to desks at mayor's campaign headquarters". (King Decl. ¶ 48; Ex. L at 11.)

In November 1997, Housing Works commenced an action in state court entitled Housing Works, Inc. v. City of New York, 680 N.Y.S.2d 487, 255 A.D.2d 209 (N.Y.App. Div. 1998), challenging the non-renewal and termination of Housing Works contracts for the provision of supportive services to PWAs. (King Decl. ¶¶ 15, 49.)

In March 1998, Housing Works obtained and released to reporters a copy of a report commissioned by the Mayor's Office of AIDS Policy that was highly critical of HRA. The New York Times, on March 12, 1998, called the report "nightmarish", and summed it up by stating that HRA had permitted PWAs to be housed in hotels where "criminal activity is rampant", citing "drug dealing, prostitution and extortion", with the full knowledge of some City workers. (Ex. O attached to King Decl.; King Decl. ¶¶ 18, 61.) The report received wide circulation in the media, and Mayor Giuliani was quoted as saying it was "a very very false picture . . . for the purposes of getting attention for themselves". The mayor's press secretary was quoted as saying that Housing Works was seeking to promote "their own biased political agenda." (Ex. O attached to King Decl.)

Thereafter, Housing Works commenced an action in this Court, Housing Works v. Safir, No. 98 Civ. 4994(HB), 1998 WL 409701 (S.D.N.Y., Jul. 21, 1998), against Howard Safir, Commissioner of the New York City Police Department, the City of New York, and May or Giuliani. In July 1998, a preliminary injunction was granted enjoining the defendants from enforcing a policy of the New York City Police Department limiting the size of groups conducting press conferences on the steps of City Hall to 25 people. Following issuance of the injunction, Housing Works held a press conference on the steps of City Hall. (King Decl. ¶ 15.) At the press conference Housing Works protested the City's violations of Local Law 49, which codified the existence of the Division of AIDS Services and mandated the availability of certain services to persons afflicted with AIDS. (King Decl. ¶ 58.) A report setting out the violations asserted that thousands of potential beneficiaries were unaware of their eligibility for benefits because the City had failed to properly publicize such eligibility (King Decl. ¶ 58.) Housing Works protesters carried placards of Mayor Giuliani stamped "AIDS Criminal", in blood red. (King Decl. ¶ 58.)

In November 1998, Mayor Giuliani left a press conference when asked about Housing Works, grimacing and throwing his hands up in disgust; the event was filmed and broadcast on the nightly news. (King Decl. ¶¶ 16, 60.) In November 1998, as Housing Works prepared to stage the protest at City Hall referred to in Safir, a widely-publicized vigil organized to "Tell the Mayor: People with AIDS are dying", the mayor took security measures, claiming that Housing Works was a "suspect organization". (King Decl. ¶¶ 16, 60; Ex. A attached to King Decl.)

In December of the same year, Housing Works staged another City Hall protest, in commemoration of World AIDS Day, carrying banners and reading aloud the names of persons who had died of AIDS. Housing Works had sought and secured injunctive relief in Housing Works, Inc. v. Safir, No. 98 Civ. 4994(HB), 1998 WL 823614 (S.D.N.Y., Nov.25, 1998), to permit Housing Works, on the steps of City Hall, to commemorate World Aids Day and to criticize Mayor Giuliani's alleged indifference. (King Decl. ¶ 15.)

During the period of successive demonstrations in late 1998, Housing Works applied for a "Welfare-to-Work" contract, a contract to provide job training for public assistance recipients with HIV/AIDS, in response to an October 1998 solicitation by the State Department of Labor ("SDOL") and State Department of Health ("SDOH"). (Turner Aff. ¶ 4.) The proposal required a written approval by the local social services district, which for Housing Works meant HRA approval. (King Decl. ¶ 86.) HRA added "affirmative approvals" to all proposals submitted to it en route to SDOL, but for three proposals, one of which was Housing Works'. (Turner Aff. ¶ 7; Ex. 6 att. to Bailey Decl.) Those three proposals were awarded merely "form letters of certification". (Turner Aff. ¶ 7; Ex. 6 att. to Bailey Decl.) HRA's certification of Housing Works as a potential service provider was submitted to the State in December 1998. (King Decl. ¶ 86.)

King alleges that on or about February or March 1999, he was informed that Housing Works was the highest ranked bidder. (King Decl. ¶ 87.)

On February 23, 1999, HRA Commissioner Turner sent a letter to the State Commissioner of Labor "withdrawing its `Certification Form for the State of New York Department of Labor HIV Welfare-to-Work Request for Proprosals'" with respect to the proposals submitted by three agencies, including Housing Works. (Ex. 6 att. King Decl., letter from Turner to SDOL dated Feb. 23, 1999). Turner's explanation for the withdrawal was that the certification had been provided with a view to "allow[ing] the selection committee as broad a review as possible", and that he had thought HRA would later have another chance to comment, this time on the proposals already deemed reviewable, but had been apprised a month earlier that HRA would not be on the final selection committee. (Ex. 6 att. King Decl., letter from Tuner to SDOL dated Feb. 23, 1999). Housing Works disputes this rationale for the withdrawal, asserting that the letter was sent because Housing Works was going to be awarded the contract. (King Decl. ¶ 88.) Turner's letter conclusively stated that all three proposals were "non-responsive . . . to the goals of HRA's Division of Aids Services and Income Support regarding private sector job development, preparation and placement." (Ex. 6 att. Bailey Decl., Letter of Turner, Feb 23, 1999). The letter detailed Housing Works' history: the March 17, 1998 DOI report, a September 4, 1998 nonresponsibility determination, and a November 18, 1998 Appellate Division decision in Housing Works v. City of New York. (Ex. 6 att. Bailey Decl., Letter of Turner, Feb 23, 1999). The letter did not detail the history of the other two programs. (Ex. 6 att. Bailey Decl., Letter of Turner, Feb 23, 1999).

Thereafter, Turner met with Karen Papendrea of SDOL and Humberto Cruz ("Cruz") of SDOH, allegedly in order "to clarify the reasons for HRA's decertification of Housing Works as a potential vendor". (Turner Aff. ¶¶ 6, 7.) Housing Works submits that the Turner meeting was called in order to prevent Housing Works from being awarded the job contract. (King Decl. ¶ 89.)

Turner stated that it would be irresponsible for HRA to approve distribution of funds to Housing Works in light of the audits and the fact that HRA had not recovered the misallocated funds, especially since City monies would provide significant funding for the state job training contract. (Turner Aff. ¶¶ 6, 7; King Decl. ¶ 89.) Moreover, Turner told SDOL that if Housing Works received SDOL funds, HRA would neither refer clients to Housing Works' programs nor approve Housing Works' billing for services rendered to clients who approached it on their own. (Turner Aff. ¶ 8.)

At the meeting, the State suggested that a third nonprofit organization would handle all financial and accounting aspects of the contract in order to alleviate any concerns as to Housing Works' financial responsibility, and that Turner rejected the proposal. (King Decl. ¶¶ 89, 90. Cruz transc.) At the meeting Turner also threatened to refuse to certify Housing Works as a Welfare-to-Work site, with the alleged result that Housing Works' clients would be precluded from participating in Housing Works' job training even if Housing Works did receive the contract. (King Decl. ¶ 92; Cruz transc.) Housing Works was not awarded the job training contract. (Cruz trans.)

B. Housing Works' Financial History

Defendants contend, in substance, that the City's response to Housing Works traces, not to the latter's public statements and demonstrations, but to its troubled financial history. Housing Works, in response, submits the following.

By late 1995 and early 1996 it had become clear to Housing Works, a burgeoning organization, that its accounting system had become inadequate. (King Decl. ¶ 23.) Housing Works' management personnel were not being timely updated on Housing Works' financial status. (King Decl. ¶ 24.) Cash flow mired and Housing Works was unable to meet payroll or make timely payments to creditors. (King Decl. ¶ 24.) Housing Works alleges that the type of financial problems detailed are not unusual for non-profits providing these kinds of services, and that others experienced the same difficulties with HRA, and that only Housing Works was singled out for punitive treatment. (King Decl. ¶ 38.)

Housing Works avers that it immediately informed HRA of its financial and accounting problems and worked with HRA and accounting firms Ernst & Young and Peat, Marwick, & Mitchell in early 1996 to produce a corrective action plan. (King Decl. ¶ 25.)

The City's Department of Investigation ("DOI") examined Housing Works' books and concluded in July 1996 that Housing Works' record keeping was inadequate, that funds had been commingled, that separate bank accounts had not been maintained, that there were unexplained fund transfers to other companies, and that a full scale audit should be performed. (King Decl. ¶ 26; Ex. C att to King Decl.)

The DOI report also faulted Housing Works for the fraudulent endorsement of checks by a Housing Works employee.*fn1 Housing Works alleges that as soon as Housing Works had discovered the misconduct in 1993, it retained a certified public accountant to review accounts and to clarify what had occurred and that Housing Works reported the matter to the New York County District Attorney's Office ("DA's Office"). (King Decl. ¶ 26 n. 2.) Housing Works alleges that as soon as the DA's Office permitted plaintiff to advise HRA, i.e., July 1995, plaintiff did so, enclosing a reimbursement for $5495.00, the total amount of misappropriated funds owed to HRA. (King Decl. ¶ 26 n. 2; Ex. E att. King Decl.) Later, in 1996, plaintiff provided the DOI investigator with all the supporting documentation. (King Decl. ¶ 26 n. 2.) Housing Works alleges that it made the City whole even though Housing Works had itself suffered a loss in excess of $100,000 as a result of the fraud. (King Decl. ¶ 26 n. 2.)

On December 12, 1996, John Dereszewski, Director of Contract Services for DASIS, wrote in a memorandum:

  In my view, Housing Works has made sufficient
  progress in recovering from the fiscal crisis it
  experienced at the beginning of this year to warrant
  our support for this venture.

(Ex. D, att. to King Decl.)

An HRA memo to MOC in August 1997 dismissed the possibility of "an alternate responsible vendor to provide housing to the DAS clients currently being served by Housing Works" on the grounds that "the fiscal reforms were reviewed satisfactorily by HRA fiscal program and MIS staff, and have significantly improved Housing Works' ability to control its fiscal operations." (King Decl. ¶ 27 & n. 3; Ex. E att. to King Decl.)

In January 1997, Gregory Caldwell ("Caldwell") became Deputy Commissioner of HRA in charge of DASIS and learned of the 1996 DOI report. (See King Decl. ¶ 28.) Caldwell had worked for Reiter from 1994 to 1997, during the period when Reiter had left to oversee Mayor Giuliani's reelection campaign, and Reiter had helped Caldwell get his job at HRA. (See King Decl. ¶ 29.) It is alleged that when Caldwell consulted Reiter concerning the report, she advised Caldwell to audit Housing Works. (King Decl. ¶¶ 30-31.) An audit was conducted by Jack Hiralall, P.C. (King Decl. ¶¶ 52.)

On October 22, 1997, HRA issued a press release stating that it refused to enter into any contracts with Housing Works. On November 7, 1997, Housing Works filed suit in state court in Housing Works, Inc. v. City of New York, 680 N.Y.S.2d 487, 255 A.D.2d 209 (N.Y.App. Div. 199 8), see discussion supra Part A.

A second DOI report was issued on March 17, 1998, criticizing Housing Works's poor record-keeping and its commingling of funds, problems that Housing Works alleges had been resolved to HRA's satisfaction in 1996. (King Decl. ¶¶ 38, 50 & n. 7; Ex. M att. to King Decl.) Plaintiff alleges that this DOI report purported to be the result of a new investigation but reviewed the same calendar years of 1995 and 1996 and the same issues as did the 1996 DOI report issued in the aftermath of Housing Works' financial crisis. (King Decl. ¶¶ 50, 51.) The 1996 DOI report did address the same issues but related only to calendar year 1995. (Ex. C, att. King Decl.) The two DOI reports draw the same conclusions. (King Decl. ¶ 51.) Housing Works alleges that the funds that came from HRA constituted a reimbursement of monies due Housing Works. (King Decl. ¶ 50 n. 7.) The second DOI report clearly disagrees with plaintiff's claims in this regard. (Ex. M att. King Decl.)

On March 18, 1998, HRA informed plaintiff that based on the second DOI report and the Hiralall audit, it was considering issuing a finding that Housing Works was "non-responsible". (King Decl. ¶ 52.) On June 3, 1998, HRA determined Housing Works to be a "non-responsible" bidder. Housing Works appealed this determination to the new Commissioner of HRA, Jason Turner. (King Decl. ¶ 53.) The finding was affirmed by Commissioner Turner on September 4, 1998. (King Decl. ¶ 54.)

Housing Works appealed HRA's final determination to Mayor Giuliani on September 14, 1998. (King Decl. ¶ 54.) Housing Works has received no ruling on the appeal from the mayor, although more than a year has elapsed. Mayor Giuliani has failed to rule despite the rule that "a prompt written decision with respect to the merits of the bidder's appeal" is required. New York City, N Y, Rules § 703(e)(4) (1998).

Housing Works contends that the mayor's failure to rule has effectively foreclosed Housing Works from challenging the finding in court. (King Decl. ¶ 54; Ex. V att. to King Decl.)

C. HUD funding

1. HUD's past funding for two of Housing Works' programs

Housing Works operates, inter alia, two permanent supportive housing projects, the East Ninth Street program in lower Manhattan, and the East New York program, in East New York, Brooklyn. (King Decl. ¶ 8.) Residents of both programs are individuals with chemical dependency or are afflicted with mental illness. (King Decl. ¶ 10.) As residents, they enjoy privacy and independence, programs to develop living skills, comprehensive health care, health education, employment opportunities, employment skills training, the opportunity to model themselves after their Resident Aides (successful graduates of the job program) and the opportunity to help regulate their own program through the "Residents' Council". (King Decl. ¶ 11.)

Financial assistance to construct and implement these two programs derived in part from $3.9 million in HUD assistance. (King Decl. ¶ 9.) Housing Works received $1.9 million in 1995, and another $1 million for its East Ninth Street residence in 1996, from HUD's Supportive Housing Program. (King Decl. ¶ 12; Wiviott Decl. ¶ 17.) The Supportive Housing Program is one of three HUD sponsored funding programs under the Continuum of Care Homeless Assistance Programs ("COCHAP"). (King Decl. ¶ 12; Wiviott Decl. ¶ 6.) Wiviott points out that Housing Works received funding at this time, although Housing Works had already begun staging protests on behalf of PWAs against the Giuliani Administration. (Wiviott Aff. ¶ 17.)

Without additional HUD funds, it is alleged that the East Ninth Street site will lack 50% of required annual revenue and the East New York program will be denied nearly 70% of required annual revenue. (King Decl. ¶ 14.) Housing Works as a whole currently operates at a loss as a result, it is alleged, of the Giuliani Administration's refusal to contract with Housing Works. The loss of HUD funds, it is alleged, would be devastating to the two programs. (King Decl. ¶ 14.)

2. The application process for the Supportive Housing Program

HUD's application process with regard to projects benefiting the City's homeless is known as the "Super Notice of Funding Availability ("SuperNOFA" or "HUD NOFA") process. (Declaration of Susan Wiviott, signed Oct. 12, 1999 ("Wiviott Decl.") ¶ 3.) Under SuperNOFA, HUD utilizes a community-based approach known as the Continuum of Care, whereby each locality develops a plan for meeting the needs of its homeless population, and submits to HUD the locality's applications for federal funding from COCHAP that best meet those needs. (Wiviott Decl. ¶ 3.)

The Continuum of Care in New York City is implemented by The Way Home Coalition ("Coalition"), a partnership of non-profit community based homeless service providers, city agencies, and state agencies, that provide services to the City's homeless. (Wiviott Decl. ¶ 4.) One of those city agencies is DHS, which provides a range of services to the City's homeless population. (Wiviott Decl. ¶¶ 2, 4.) The Coalition has a Steering Committee, comprised of a DHS representative and representatives of eight other member organizations, to develop policy, establish priorities, and identify gaps in City services already provided to the homeless, in order to design an effective Continuum of Care plan. (Wiviott Decl. ¶ 4.) The Steering Committee designated the following four categories of programs as high-priority: renewals and providers of services to drug addicts, to the mentally disabled, and to persons with AIDS. (Wiviott Decl. ¶ 28.) Housing Works asserts that as a renewal program serving a specialized population of PWAs, it is a high priority program four times over. (Wiviott Decl. ¶ 28.) Wiviott disagrees, asserting that, in an attempt to fill an existing gap in services, the latter three are priority categories applicable to new programs only. (Wiviott Decl. ¶ 28.) The Steering Committee has designated DHS to oversee and coordinate the City's HUD NOFA application. (Wiviott Decl. ¶ 4.)

One of Wiviott's responsibilities as DHS Associate Commissioner of Policy and Planning, a position she held from September 1994 to September 8, 1999,*fn2 was to oversee the annual application process and report directly to the DHS Commissioner. (Wiviott Decl. ¶¶ 1,5.) Day-to-day supervision of the HUD NOFA application process was executed by Sawyer, the DHS employee who reported directly to Wiviott. Sawyer has been Senior Policy Analyst since November 1996. (Wiviott Decl. ¶ 5; Sawyer Aff. ¶ 1.) It was Wiviott who was the DHS representative on the Coalition's Steering Committee. (Wiviott Decl. ¶ 5.)

The ranking is inserted into the Narrative, which is a HUD mandated description of the locality's Continuum of Care plan and was prepared for New York City in 1999 by Burchman, Wiviott, Sawyer, and the Steering Committee. (Wiviott Decl. ¶ 10.) The Narrative is inserted into an application form, as HUD mandates, and DHS provides ranked applicants with applications to complete and to submit directly to HUD. (Wiviott Decl. ¶¶ 10,11.)

The rankings are important because the HUD allocation is disbursed to the projects in order of rank in accordance with each project's requirements, until the money runs out. It is also a fact that HUD has in the past awarded additional sums beyond its anticipated allocation. (Sawyer Aff. ¶ 3.) Because the HUD allocation for 1999 is known to be $54 million, and projects ranking 1 through 56 in the 1999 applications have requested an aggregate of $53,918, 674, a ranking this year lower than 56 effectively forecloses receipt of HUD funds. (King Decl. ¶ 66.)

Oesterreich asserts that directing that plaintiff be ranked lower than the anticipated aggregate HUD allocation was an effective way to ensure that DHS would not be in the position of recommending funding for Housing Works' programs. (Oesterreich Aff. ¶ 8.) Sawyer avers that because of HUD's past practice of awarding additional sums, even projects ranked below 56 this year will probably not be foreclosed from receiving COCHAP funding. (Sawyer Aff. ¶ 13.)

3. Housing Works' application for HUD funding in 1999

On April 12, 1999, Housing Works submitted its application to the City. (King Decl. ¶ 63, 64.) Sawyer, the DHS official responsible for the SuperNOFA process, asserts that she "thought that both of Housing Works' programs looked good during [her] site visits, and [she] had no major problems with their pre-applications." (Sawyer Aff. ¶ 6.) At the hearing she testified that both projects were "excellent" and "high quality". She further testified that, in all material respects, the projects "met or exceeded HUD goals.". She noted that prior to her evaluations Housing Works had lost funding from DASIS. She gave the East 9th Residence a score of 80/90 and the East New York residence a 77/90. (Sawyer Aff. ¶ 6.) When Sawyer scored plaintiff's pre-application, Housing Works received a score that would have translated into ranks of 30th and 33rd with regard to the two subject programs. (King Decl. ¶ 70.)

Oesterreich, the newly appointed DHS Commissioner, testified that he ordered that Vendex reports be reviewed for all bidders, and thereafter the Vendex report for Housing Works disclosed that plaintiff had been found to be "non-responsible". He, therefore, directed that Housing Works' programs be ranked low enough to ensure that DHS would not be in the position of recommending funding for Housing Works' programs. (Oesterreich Aff. ¶ 8.) He states that no official instructed him to rerank plaintiff's projects. (Oesterreich Aff. ¶ 11.) Wiviott, in turn, directed Sawyer to rank Housing Works' projects lower than 56th but not consecutively. (King Decl. ¶¶ 71, 72; Sawyer Aff. ¶ 7.) Sawyer thereupon ranked plaintiff's projects 57th and 60th respectively, predetermining the scores Housing Works should be given in order to justify that ranking. (King Decl. ¶ 73.)

On May 21, 1999, when DHS released the rankings of the 71 projects, Housing Works' two projects were ranked 57th and 60th. (King Decl. ΒΆ 65.) Of the 35 projects seeking renewal, plaintiff's was last; the next lowest was 44th, and ...

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